PROJECT SUMMARY Ten-eleven translocation (TET) proteins play key roles in regulating the methylation status of DNA through oxidizing methylcytosines (5mC), generating 5-hydroxymethylcytosines (5hmC) that can both serve as stable epigenetic marks and participate in active demethylation. Unlike the other TET-family members, TET2 does not contain a DNA-binding domain, and it remains unclear how it is recruited to chromatin. Here we show that TET2 is recruited by the RNA-binding protein Paraspeckle component 1 (PSPC1) through transcriptionally active loci, including endogenous retroviruses (ERVs) whose long terminal repeats (LTRs) have been co-opted by mammalian genomes as stage- and tissue-specific transcriptional regulatory modules. We find that PSPC1 and TET2 contribute to ERV and ERV-associated gene regulation by both transcriptional repression via histone deacetylases and post-transcriptional destabilization of ERV RNAs through 5hmC modification. Our findings provide evidence for a functional role of transcriptionally active ERVs as specific docking sites for RNA epigenetic modulation and gene regulation. The goal of this project is to study whether and how TET2 may be targeted to chromatin via RNAs and RNA-binding proteins leading to RNA hydroxymethylation-mediated regulation of MERVL and their associated 2C genes for pluripotency of ESCs, as opposed to the sporadic totipotent 2C populations in ESCs. We hypothesize that RNA-dependent chromatin targeting of TET2 is critical for direct RNA demethylation and degradation of MERVL transcripts, which may lead to development of efficient tools in manipulating stem cell and developmental potency. The following three aims will test this hypothesis and explore stem cell potency control by an intimate interplay among TETs, RBPs, and ERVs. 1) Establish RBP-dependent functions of TET2 in RNA modification; 2) Explore novel TET2 functions in RNA- dependent chromatin targeting by regulating RNA targets for pluripotency of ESCs; and 3) Manipulate stem cell and developmental potency with RNA targeting CRISPR/RCas9 for targeted MERVL RNA modification in ESCs and developing embryos. The first aim will establish novel functions of TET2 in hm5C modification of MERVL transcripts in a PSPC1-dependent manner. The second aim will dissect the consequence of hm5C modification of MERVL transcripts and the molecular mechanism underlying hm5C-mediated MERVL degradation. The third aim will explore manipulating stem cell and development potency by direct MERVL RNA modification. Taken together, these three aims will provide considerable novel insight into RNA-dependent chromatin targeting of TET2 for the posttranscriptional mechanism of MERVL control in stem cell potency. The project is highly significant as it is expected to establish a new paradigm in understanding ERV regulation, TET functions in RNA modification, and totipotency.